Energy company Scottish and Southern has announced a fresh increase in bills for its seven million domestic users.

Customers will face a 12.2% rise in gas bills, while electricity prices will go up by 9.4% from 1 January, 2007.

The announcement follows the firm's promise not to raise prices again during 2006.

Wholesale energy prices have dropped in the past month, but the firm said it was still feeling the impact of higher prices over the past three years.

The owner of Southern Electric, Scottish Hydro Electric and Swalec in Wales, said its gas and combined electricity and gas bills were still the lowest in the UK.

"We have made fewer price increases than all the other major energy suppliers over the past three years and we have passed on to our customers far less than the full extent of the increase in wholesale energy prices," said the firm's energy supply director Alistair Phillips-Davies.

"If, as everyone hopes, falls in wholesale energy prices continue and are sustained, we will move as quickly as we can to reverse the price rises of recent years."

Scottish and Southern has hiked tariffs by as much as 13.6% and 15.9% in two rises at the start of this year.

The firm's customers are paying on average about 90% more for gas and 60% more for electricity than in January 2003, according to consumer group Energywatch.

'Fuel impoverished'

Chief executive of Energyhelpline.com, Paul Green, said that as companies had bought their supplies up to nine months in advance, then consumers would continue to see prices rise - despite the recent falls in the price of fuel on the wholesale market.

"Because they purchased at the top of the market, this trend of price rises will continue as the companies try to recoup their costs," he said.

"Many of Scottish and Southern's customers are in regions where the economy is not so robust, and more and more people are going to become fuel impoverished as a result of this latest price rise."